What is Reengineering?

Reengineering:

the fundamental rethinking

and radical redesign of business processes
to achieve dramatic improvements in critical
& contemporary measures of performance,
such as cost, quality, service and speed (Hammer
& Champy, 1993)
Reengineering is implemented when a company
deems the current system is no longer efficient or
failing to compete with other companies.
Reengineering can be disastrous without proper
analysis of business needs.

How to Reengineer a Business

Process?
Selecting the Processes for Reengineering
Identify Change Enabler
Developing a Business Vision and Process
Objectives
Understanding and Improving Existing
Processes
Designing the New Processes and
Organization
Implementing the New Process-Based
Organization

1. Selecting the Process for

Reengineering
Enumerate
major
process
Determine
process
boundaries
Prioritize
process for
reengineeri
ng

Enumerate Major
Processes
Key to identify the number of processes : the level of

process
Most of the companies that have identified their
processes in the context of reengineering have
enumerated
between 10 & 20
Incremental
Radical process
improvement
change
Narrowly-defined
Low rewards and risk
of failure

Broadly-defined
Improving handoffs
between functions
Great possibility of
innovation
Should be broken
down into its
subprocesses

Determine Process Boundaries

The process that becomes the focus for a reengineering

must have clearer boundaries and relative importance

Most companies that have worked on their processes for a
number of years have revised their original lists.
When might the
process owner
begin&stop worrying
about the process?

When should process

customers
involvement begin
and end?

Where do
subprocesses
begin&end?

Is the process fully

embedded within
another process?

Are performance benefits likely to result from

combining the process with other processes
or subprocesses?

Prioritize Processes for

Reengineering
Five criteria to guide process
selection

The processs centrality to the

execution of the firms business
strategy
The state of the processs health
The processs culture and leadership
The current cost of the process
Manageable project scope

2. Identifying Enablers of
Change
Assess IT
enablers of
reengineering
Assess
organizational
& HR enablers
of
reengineering

Determine
which
constraints
will be
accepted

Assess IT Enablers of
Reengineering
IT as
enabler

New
Process
Design

IT as
implementer

Opportunities

Modeling Tools

Constraints

System&Informati
on Engineering

Assess Organizational & HR

Enablers of Reengineering

Determine Which
Constraints Will Be Accepted
The analysis of constraints tailors the process to a systems

environment from the beginning.

Many

change management methodologies focus on

identifying and removing organizational and HR constraints.

Determine Which Constraints

Will Be Accepted (Contd)
Aspects of the system that should be
analyzed:

Developing a Process Vision (1)

Key Activities:

Developing a Process Vision (2)

Assess Existing Business Strategy for Process
Directions
Consider:
Address nonfinancial goals in addition to financial
ones?
Measurable?
Focus attention on specific processes of the
business?
Inspire efforts to change?

Developing a Process Vision (3)

Consult with Process Customers to Determine
Performance Objectives
Consider customers perspective on the process on
finding:
What they require of our processes serves
multiple purposes?
What customers desire for a close relationship?
What specific areas in which improvement should
take place?

Developing a Process Vision (4)

Benchmarking for Performance Targets and
Examples of Innovation (1)
Benchmarking could help to:
Determine process objectives
Identify innovative process attributes
Look outside for alternative ways of designing
process
Break a companys inwardly focused mindset

Developing a Process Vision (5)

Benchmarking for Performance Targets and
Examples of Innovation (2)
Consider:
Traditional competitive benchmarking
Best practice or innovation benchmarking, by:
Selecting companies on the basis of the
performance of a particular process
Address specific innovations and uses of change
enablers
Sources of benchmarks (contact benchmarked
organizations directly)

Developing a Process Vision (6)

Formulate Process Performance Objectives (1)
Process objectives key component of the vision
Consider:
Overall process goal
Specific type of improvement desired
Numeric target for innovation
Time
frame in which the objectives are
accomplished
Analysis on the functions and value of the process
is expected to bring customers

Developing a Process Vision (6)

Formulate Process Performance Objectives (2)
Reduce processing
costs for customer
orders by 60% over
three years

Reduce
processing costs
for customer
orders by 60%
over three years

Double customer service

satisfaction level in two
years

Reduce new
drug
development
cycle time by
50% in three
years

What business objective is this process supposed to

accomplish?

Developing a Process Vision (6)

Develop Specific Process Attributes
Process attributes the descriptive, non-quantitative adjunct
to
process objectives
Use:
Categorization of attributes as technology, people, process
outputs, and so on.
Multiple sources, such as:
Analysis of corporate strategy and vision
High-level overviews of the roles of technology and people
Customer interviews
Benchmarking of the best processes in other companies
Firms performance objectives

Understanding and Improving

Existing Processes (1)
The reason:
1. Facilitates communication among participants in
the reengineering initiative
2. As
essential
input
to
migration
and
implementation planning
3. Useful for understanding the magnitude of
anticipated change and the tasks required
4. Can help to ensure that existing processes are
not repeated in the new process
5. Can provide a measure of the value of the
proposed innovation

Understanding and Improving

Existing Processes (1)
Key Activities:

Understanding and Improving

Existing Processes (2)
Assess the Current Process Flow
Consider:
Consultation with the performer
Documents of captured process
Scope
Measure the Process in Relation to the New Process
Objectives and Attributes
Consider:
Same criteria employed for the new design
Reducing the time and effort required for the current
process analysis

Understanding and Improving

Existing Processes (3)
Identify Problems with or Shortcomings of the Process
Consider:
Long-standing problems that have gone unrecognized
Avoidance of them in the new design
Customers as a key source
Asses Current Information Technology and Information
Consider:
IT architecture (applications, databases, technologies, and
standards)
Job
descriptions, skills inventory, and any recent
organizational changes

Understanding and Improving

Existing Processes (4)
Identify Short-Term Improvements in the Process
Useful for:
Document problems known for years (by analysis
activity)
Short-term benefit
A way to begin to deliver results
Funding reengineering

Designing and Prototyping the New

Processes and Organization (1)
The Output:
1. Detailed process and information flows
2. Detailed technology architectures and human
resource plans
3. Prototypes of the process and its key enablers

Designing and Prototyping the New

Processes and Organization (2)
Key Activities:

Designing and Prototyping the New

Processes and Organization (3)
Brainstorm Design Alternatives
Consider:
Generating several different process designs (meet the
process vision)
Design innovation through a series of workshop or
brainstorming
Emphasis on creativity and idea generation
Non-judgmental atmosphere

Designing and Prototyping the New

Processes and Organization (4)
Assess Feasibility, Risk & Benefits of Design
Alternatives, and Select the Preferred Process Design
Consider:
Graphic representation (for communication and recording)
Large whiteboards and large pieces of colored paper and
string affixed to walls
Computer-based tools
Feasibility analysis (benefits, costs, risks, and time frames)
Comparison in terms of structure, technology, and
organization
Optimum design

Designing and Prototyping the New

Processes and Organization (5)
Prototype of New Process Design
Output: organizational prototype
Goal gradually shape the organizational environment
or revise the
technology
Consider:
Simulation and Testing
Refinement the fit between new process structure,
information technology, and organization (iterative)
Many iterations (must not be viewed as failure)

Designing and Prototyping the New

Processes and Organization (6)
Develop the Migration Strategy
Consider:
The firm may not want to risk a full and abrupt transition if:
the new process involves customers, revenues, or valued
employees
the process change will be highly visible internally of
externally
A pilot (implementation in a unit that most capable of
achieving successful change) as the beginning
A phased introduction (implementation
of new systems
capabilities and skills as they become available)
Employees ability to handle the change

Designing and Prototyping the New

Processes and Organization (7)
Implement New Organization Structures and
Systems
1. Create an entirely new organization if constraints
within the existing environment are too great
2. Run the organization parallel to the existing one
3. Make the organization as locus of specific products,
channels, or customers
Example: Midland Bank
a. establish First Direct to service retail customers
without the usual branches
b. CS processes rely on telephone and ATM
c. extensive use of IT

Implement New Organization

Structure and Systems (1)
Challenges:
Structured organizations that mitigates against the success
of the new process designs
Most organizational structures based on either function or
product, with little or no process orientation
Functionally organized firm have difficulty in meeting
customer needs seamlessly across different functions
A firm organized around product structure have difficulty in:
ascertaining total business done with individual customers
cross-selling different products to the same customer
Very few firms that have adopted a fully horizontal
organization
Well-known problems in an organization with matrix
structures

Implement New Organization

Structure and Systems (2)
Complete innovation cycle:

Caution:
a. Use highly iterative fashion in execution
b. Do not use rigid partitioning of the activities
c. Must manage the benefit of reengineering over time
d. Carefully monitor key behaviors, process operational
performance, and key financial indicators

CONCLUSION
1.

Reengineering business processes has six steps.

They are selecting the processes for reengineering,
identify change enabler, developing a business vision
and process objectives, understanding and improving
existing processes, designing the new processes and
organization, implementing the new process-based
organization.

2.

After reengineering business process, we should

execute complete innovation cycle which shown
below.

THE END